Refer to Figure 13-18. The diagram demonstrates that

A) in the long run, the monopolistic competitor produces the minimum-cost output level, Qa, but in the short run its output of Qb is not cost minimizing.
B) it is possible for a monopolistic competitor to produce the productively efficient output level, Qa, if it is willing to lower its price from Pb to Pa.
C) in the short run, the monopolistic competitor produces an output Qb but in the long run after it adjusts its capacity, it will produce the allocatively efficient output, Qa.
D) it is not possible for a monopolistic competitor to produce the productively efficient output level, Qa, because of product differentiation.


D

Economics

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